The cascading of surplus 8,000teu ships into the Asia to east coast South America trade and the launch of a new service by MSC are the main reasons for an April to July 34% increase in capacity and a consequential collapse in spot rates, according to shipping consultant Drewry.
In its latest Container Weekly Insight, Drewry says that the ocean carrier strategy of cascading these ships into the Asia-ECSA trade “appears to have seriously backfired, and painted them into a corner”.
The cascading of surplus 8,000teu ships into the Asia to east coast South America trade and the launch of a new service by MSC are the main reasons for an April to July 34% increase in capacity and a consequential collapse in spot rates, according to shipping consultant Drewry.
In its latest Container Weekly Insight, Drewry says that the ocean carrier strategy of cascading these ships into the Asia-ECSA trade “appears to have seriously backfired, and painted them into a corner”.
The analyst added that the negative freight rate impact of the substantial upgrading of tonnage to a trade lane that expanded by just 4.7% in the first three months of the year, compared to the same period of 2012, would be further aggravated by the introduction of MSC’s new Ipanema service in July.
Although MSC would appear to be at a cost disadvantage to its rivals owing to the deployment of smaller 4,500 teu tonnage on the 11-ship service, Drewry said that the vessels had been chartered in at a very low rate of $6,000 per day, thus mitigating the Geneva-headquartered carrier’s theoretically more expensive unit cost base.
Drewry concluded: “As much as ocean carriers would like to hide surplus 8,000 teu vessels in the north-south trade lanes, this cannot be achieved in the current poor economic climate without creating overcapacity and rate reductions.”
According to Drewry’s Container Freight Rate Insight, spot rates from Shanghai to Santos plunged by 26% between April and May to an all-in $2,810 per feu.
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